10 ms·

It's hard to come up with a system of assessing property values that doesn't have flaws. If you used the last sale price and didn't adjust, people who bought 3

by patmcc 11y ago

It's hard to come up with a system of assessing property values that doesn't have flaws. If you used the last sale price and didn't adjust, people who bought 30 years ago would benefit unfairly. If you used the sale price and adjust annually, how do you do it? By inflation, by average country/state/city/neighborhood increase in sale prices, etc.? Each has problems. If you hire people to assess the current market value, they can be bribed or make mistakes. I really like property taxes as a way to fund government, but determining the value of something like a house/condo is actually a bit tricky.

ars 11y ago
> It's hard to come up with a system of assessing property values that doesn't have flaws. You use square footage of livable area and land. The rates for each (which are different) are the average sale price of all houses in the neighborhood per square foot. The only hard part is determining neighborhoods. Sure some houses are extra fancy and worth more, but the difference is not large enough to worry about since fancy houses also tend to be larger.
- sokoloff 11y ago
  There are many systems that get you within +/-25% for 90% of the houses. Yours is probably in that range, depending on what time period you choose. If you choose a whole year, your assessments will lag badly in a fast moving market. If you choose a shorter time period, you risk the small number of sales making the measure a noisy one. I suspect the whole year basis is a better balance. Then of course, there's the "is a garage livable area? is it land? is it neither?" "is a basement livable area?" "what makes an attic livable area vs storage?" "what about porches? patios? sheds? gazebos?"
  - ars 11y ago
    Taxes are usually assessed and paid once a year, so I would go with one year. Livable area is already very well defined in law, so no need to do it again. Every real estate listing has this number. There's even an ANSI standard Z765-2003 for it.
    - sokoloff 11y ago
      ANSI standard (for single-family buildings only) was an interesting read. Thanks for that pointer!
sokoloff 11y ago
I've often wondered if one could build a system where the appeals process for an assessment is "the municipality must buy the house at 95% of the assessed value" and "the homeowner must accept a bid at 150% of the assessed value [if they haven't already appealed the assessment in a timely fashion]". Naturally, I started wondering this while I owned a house that the town was over-assessing IMO. Allow the government to set the rate as they see fit (with all the normal controls of an iterative democratic/representative process), but the assessed value is also a bid of sorts. Of course there are flaws: an assessment shouldn't vary based on how willing someone is to move, it's still easy to under-assess by a little (but then that drives the rate higher to make the budget), and I'm still a little disquieted by the idea that the control against under-assessing so undermines property rights. I think that Cambridge (MA) gets this reasonably right. My assessments have tracked the overall market in my area (at least loosely). They might be 10-20% off in a rising market, but they're not 50% off.
- Spooky23 11y ago
  It's not so hard. You re-base the assessment rolls every 4-7 years, and allow owners to challenge unfair assessments in between. The problem lies in the nature of politicians... Reassessments upset people whose assessments go up, so the big players lobby to defer the re-basing. Or in the case of California, you never revisit until the property changes hands.
  - sokoloff 11y ago
    "Re-base the assessment" : yes, but how? In a metrics-based way (#BR, #Baths, square footage)? In an aggregate neighborhood-based way (all 02138 is up 3% this year)? Via drive-by appraisals? Via invasive inside the house appraisals or "broker price opinions"? (The last clause would seem to have significant Fourth Amendment concerns.)
    - Spooky23 11y ago
      Usually the use a metrics based valuation using recent sales. Home improvements are captured by building permits. The people who do it tweak the process based on geography and demographics. That's exactly how mortgage underwriting works. It's not 100% accurate, but there is an appeals process to address inequities.

by patmcc 11y ago

ars 11y ago

> It's hard to come up with a system of assessing property values that doesn't have flaws. You use square footage of livable area and land. The rates for each (which are different) are the average sale price of all houses in the neighborhood per square foot. The only hard part is determining neighborhoods. Sure some houses are extra fancy and worth more, but the difference is not large enough to worry about since fancy houses also tend to be larger.

sokoloff 11y ago
There are many systems that get you within +/-25% for 90% of the houses. Yours is probably in that range, depending on what time period you choose. If you choose a whole year, your assessments will lag badly in a fast moving market. If you choose a shorter time period, you risk the small number of sales making the measure a noisy one. I suspect the whole year basis is a better balance. Then of course, there's the "is a garage livable area? is it land? is it neither?" "is a basement livable area?" "what makes an attic livable area vs storage?" "what about porches? patios? sheds? gazebos?"
- ars 11y ago
  Taxes are usually assessed and paid once a year, so I would go with one year. Livable area is already very well defined in law, so no need to do it again. Every real estate listing has this number. There's even an ANSI standard Z765-2003 for it.
  - sokoloff 11y ago
    ANSI standard (for single-family buildings only) was an interesting read. Thanks for that pointer!

sokoloff 11y ago

I've often wondered if one could build a system where the appeals process for an assessment is "the municipality must buy the house at 95% of the assessed value" and "the homeowner must accept a bid at 150% of the assessed value [if they haven't already appealed the assessment in a timely fashion]". Naturally, I started wondering this while I owned a house that the town was over-assessing IMO. Allow the government to set the rate as they see fit (with all the normal controls of an iterative democratic/representative process), but the assessed value is also a bid of sorts. Of course there are flaws: an assessment shouldn't vary based on how willing someone is to move, it's still easy to under-assess by a little (but then that drives the rate higher to make the budget), and I'm still a little disquieted by the idea that the control against under-assessing so undermines property rights. I think that Cambridge (MA) gets this reasonably right. My assessments have tracked the overall market in my area (at least loosely). They might be 10-20% off in a rising market, but they're not 50% off.

Spooky23 11y ago
It's not so hard. You re-base the assessment rolls every 4-7 years, and allow owners to challenge unfair assessments in between. The problem lies in the nature of politicians... Reassessments upset people whose assessments go up, so the big players lobby to defer the re-basing. Or in the case of California, you never revisit until the property changes hands.
- sokoloff 11y ago
  "Re-base the assessment" : yes, but how? In a metrics-based way (#BR, #Baths, square footage)? In an aggregate neighborhood-based way (all 02138 is up 3% this year)? Via drive-by appraisals? Via invasive inside the house appraisals or "broker price opinions"? (The last clause would seem to have significant Fourth Amendment concerns.)
  - Spooky23 11y ago
    Usually the use a metrics based valuation using recent sales. Home improvements are captured by building permits. The people who do it tweak the process based on geography and demographics. That's exactly how mortgage underwriting works. It's not 100% accurate, but there is an appeals process to address inequities.